Think the iPhone is still just for developed markets? The BRICs would beg to differ

There’s a great deal of focus on iPhone sales trends in North America and Europe, particularly from the tech blogger echo-chamber. That’s understandable, given that most of these writers and websites are based in the US, but increasingly the Apple iPhone is becoming an emerging market story.

In the most recent (second) quarter, Apple reported a “new all-time record for total iPhone sales in the BRIC countries”. Bloomberg suggests that in the overall smartphone market, the four BRIC countries (Brazil, Russia, India and China) account for more sales than all other emerging markets combined. Or, in fact, developed markets. That’s incredible.

Of course, the addition of China Mobile by Apple in January is significant. The world’s largest mobile operator has 781-million customers (of which 225-million are 3G customers, and 3-million are using 4G). It’s no surprise then, that iPhone sales were up 28% in China year-on-year. China’s big for Apple, and its customers are transacting. Sales growth in the App Store in China was ‘triple digits’ (meaning it more than doubled against 2013). Even sales of the iPad did well, increasing 6% versus a flat overall tablet market.

On the earnings call, Apple chief executive Tim Cook said of China: “I feel like there’s still loads of opportunity there, and feel really, really good about how we’re doing.”

Overall – and of particular reference to emerging markets – Apple cites a “great response to the more affordably priced iPhone 4S”. The iPhone 5C remains out of reach of most buyers in emerging markets, but the iPhone 4S is not. Brand cachet and status is arguably more important in emerging markets than in developed ones, which is why consumers in these markets would happily buy a two-and-a-half-year-old smartphone from Apple versus a similarly-priced, newer one from a competitor.

But this is not just about China. Apple says “iPhone sales grew by strong double-digits year-over-year” between January and March in Brazil, Indonesia, Poland and Turkey as well. In India and Vietnam, iPhone sales more than doubled. On a six month view, ie. October to March, iPhone sales in Brazil grew 61%, Russia by 97%, Turkey by 56%, India by 55%, and Vietnam by 262%.

There are no numbers for Africa, perhaps because South Africa is really the only sub-Saharan market where iPhones sell in significant volumes. That doesn’t mean that Apple doesn’t have a presence in countries like Nigeria and Kenya (it very definitely does).

Apple sells roughly to 100 000 iPhones a quarter in South Africa across all operators (smoothed), which is somewhere between 30 000 and 40 000 a month. In launch periods (typically December through February), those numbers are higher. So not insignificant, but hardly comparable with Brazil, India or Russia (never mind China!).

These are very strong numbers, given that (with the exception of Vietnam and possibly Turkey) this growth is not off a low base. Said Cook “I could go on, but the point is that there’s a number of markets out there where we are beginning to really catch on to a number of customers, and I am particularly proud of the results in these markets because these have not been historic strong points for Apple.”

Well-known Apple analyst Horace Dediu of Asymco told Bloomberg that “Everything that happens in the wealthiest countries happens in all other countries; you can set your watch by it.” Apple may be pleasantly surprised by the growth in emerging markets but they are not by any means confounded by it.

It’s no surprise then that Apple’s turning its attention in the retail space to emerging markets. In the first three months of (calendar) 2014, Apple opened its first retail stores in Brazil and Turkey. Expect more to pop up in what Cook terms markets that haven’t been “historically strong”.

There are rumours of future Apple retail stores being built in Indonesia, Thailand, Russia and (yes), South Africa. (India remains tricky, given foreign ownership restrictions on retailers). It’s going to triple its store count in China in the next two years. Expect that to be atop incoming retail head Angela Ahrendts’ to-do list when she joins the executive team this week.

An Apple retail store in Johannesburg, Cape Town (or Lagos!) in the next two years? I wouldn’t bet against it.

Author | Hilton Tarrant: Columnist

Hilton Tarrant is production editor at Moneyweb. His main focus is project management for the listed company’s local and international websites, and contributes to their strategic direction. From time-to-time, he also fills in for Alec Hogg on the SAfm Market Update with Moneyweb radio programme. In between, he covers... More

But… We already have Apple retail stores in South Africa? The iStore! Although I think that’s owned by the Apple distributor here in SA, Core Group. Perhaps you mean an Apple owned Apple store? Meaning Core Group would no longer distribute and Apple would handle all distribution in the country? I may be way off track with my thinking.